Report on the 31 March 2019 Actuarial Valuation

Report on the 31 March 2019 actuarial valuation

Local Government Pension Scheme (Northern Ireland) Prepared for Northern Ireland Local Government Officers' Superannuation Committee as Scheme Manager of LGPS (NI) Prepared by Aon 2019 30 March 2020

At a glance

Past Service Position Shorthand There was a surplus of £836.9M relative to the liabilities. The funding level was 112%. Funding level: the value of assets held by the Fund divided by the liabilities. Funding target (liabilities): the level of assets determined by the Committee as being appropriate to meet member benefits, assuming the Fund continues indefinitely. Future service rate: the employer share of the cost of benefits being earned in future, expressed as a percentage of pensionable pay. The figure quoted is a weighted average of all employers' future service rates. Pensionable Pay: as defined in the Regulations in Employer Contributions relation to post-2015 membership. % of 2019 valuation 2016 valuation Recovery period: the period over which any surplus or Pensionable Pay shortfall is eliminated. Future service rate 20.7% 19.3% Past service rate: the adjustment to the future service Past service rate (4.3)% 1.7% rate, expressed as a % of pensionable pay, needed to Allowance for possible cost 3.2%* n/a restore the funding level of the Fund as a whole to 100% over the recovery period, if the membership is broadly of McCloud / Cost Cap stable and pay increases and other assumptions are as Total rate 19.6% 21.0% assumed. This adjustment is negative when the Fund is in Recovery period 20 years from 1 April 2020 20 years from 1 April 2017 surplus. *2.8% Future service, 0.4% past service. Shortfall (deficit) / Surplus: the difference between the value of assets and the aggregate funding target (value of The aggregate Employer future service contribution rate (the "common rate of employers' the liabilities) for the Fund as a whole, where the value of contribution") is 20.7% of Pensionable Pay. assets is less/higher than the funding target. Individual The contributions payable by each employer or group of employers may differ because they employers may have a surplus or shortfall, and the total of allow for each employer's or group's membership profile, funding target and funding level, these will be equal to the shortfall or surplus for the Fund recovery period and other parameters appropriate to their circumstances. as a whole.

Contents At a glance ...... 2 Introduction Introduction ...... 3 This actuarial valuation report is required by Regulation 68 of the Regulations. It summarises the results of the funding Update since the previous valuation ...... 5 valuation of the Fund at as 31 March 2019, including the Rates and Adjustments Certificate which sets out the contributions Notable changes since the previous valuation ...... 6 payable by employers from 1 April 2020 to 31 March 2023. Membership data and benefits valued ... 7 Next steps Funding objectives ...... 8 This report concludes the formal valuation process and draws together other pieces of work and advice. As required by Summary of assumptions ...... 10 Regulation 72 this report must be published and made available to the Department for Communities (Northern Ireland), Past service results ...... 13 current and prospective employers who contribute, or may become liable to make payments to the Fund. Addressing the shortfall / allowing for the surplus ...... 14

Future service results ...... 15 Risks and uncertainties ...... 16 Individual employer contribution rates . 17 Final comments ...... 19 Further Information ...... 21

a. Legal framework 22 b. Membership data 24 Alison Murray FFA Scott Campbell FIA c. Uncertainties 43 d. Assets 48 [email protected] [email protected] e. Assumptions used to value the liabilities and assess contribution rates 49 f. Membership experience 54 g. Dashboard 55 h. Rates and Adjustments Certificate 57

i. Glossary 73 Contact us ...... 82 The report concentrates on the Fund's financial position at the valuation date. As time moves on, the Fund's finances will fluctuate. If you are reading this report sometime after the valuation date, the Fund's financial position could have changed significantly.

Shorthand Fund: Northern Ireland Local Government Officers' Pension Fund (or L.G.P.S (NI)) Committee: Northern Ireland Local Government Officers' Superannuation Committee (NILGOSC), in its role as the Scheme Manager of the Fund Employers: NILGOSC, and other employers with employees participating in the Fund Regulations: The Local Government Pension Scheme Regulations (Northern Ireland) 2014 (as amended) (and other Regulations as referenced in the Glossary) Additional information

Section a in the Further Information section appended to this report sets out the legal framework within which the valuation has been completed. The benefits valued are set out in the Regulations. Throughout this report, assets and liabilities in respect of defined contribution additional voluntary contributions (or AVCs) have been excluded. The funding targets, recovery periods and other parameters which apply to individual employers or groups of employers are set out in other advice papers.

Update since the previous valuation

Financial development Key results from the previous valuation as at 31 March 2016: The table below compares the key financial The Fund's assets were £5,820.1M and the past service liabilities were £6,082.7M, assumptions made at the previous valuation with what corresponding to a shortfall of £262.6M and a funding level of 96%. actually happened and the corresponding assumptions The aggregate employer future service contribution rate was 19.3% of Pensionable Pay. for the 2019 valuation.

Employer contributions from 1 April 2017 were agreed to broadly restore the funding level to 2016 2016-2019 2019 assumption experience assumption 100% over a period of up to 20 years as follows: . An average employer contribution rate of 19.3% of Pensionable Pay; and Investment 4.5% pa 11.0% pa(1) 4.1% pa . Additional monetary amounts giving total contributions as follows: returns

Year from 1 April % of Pensionable Pay Plus aggregate contribution CPI 2.0% pa 2.1% pa(2) 2.1% pa amounts (£M) increases 2017 18.3 18.5 Pay 3.5% pa(3) 3.4% pa* 3.6% pa(3) 2018 19.2 18.7 growth 2019 20.2 18.8

(1) average figure, actual increases were: 21.6%, 6.2%, 5.9% For employers in surplus or where contributions were being stepped up (or down) the % of Pay (2) average figure, actual increases were 1.0%, 3.0% and 2.4% rate may have been lower (higher) than the future service contribution rate. Similarly, the (3) plus a promotional pay scale aggregate contributions may have been higher or lower than the sum of theoretical employer past service contributions where contribution changes were being stepped or otherwise *Actual pay increase experience (estimated from the data) is shown over the period smoothed in line with the Funding Strategy Statement (FSS). The recovery period shown is the from 2016 to 2019. This is total pay experience. Stripping out an approximate maximum permitted. Individual employers may have a period less than this in line with the FSS. allowance for promotional increases based on the valuation assumptions gives c3% In addition, employers pay contributions to meet additional strains arising on early retirement or of pay compared to the inflationary pay increase assumption of 3.5% in 2016 due to increases in benefits. Members also paid contributions as required by the Regulations.

Notable changes since the previous valuation

Shorthand

Changes affecting funding are briefly described below: GMP: Guaranteed Minimum Pensions. These accrued to members between 1978 and 1997 due to the LGPS (NI) being contracted-out of the State Earnings Related . Benefits / membership Pension Scheme Responsibility for paying full CPI pension increases on GMPs passing to the Fund for McCloud/Sargeant: Court cases involving the Judges' members reaching State Pension Age (SPA) between 1 April 2016 and 5 April 2021. and Firefighters' Pension Schemes respectively which The Government being denied leave to appeal the McCloud/Sargeant judgement followed found that transitional protections granted to members by the Ministerial Statement on 15 July 2019, which is expected to lead to an extension of within 10 years of pension age as part of the reforms to the final salary underpin in the LGPS (NI) or establishment of a new underpin. those schemes in 2015 constituted illegal age Potential changes in benefits as a result of the cost management process to assess the cost discrimination of public sector schemes against a base cost, although these changes are currently paused Cost management: The process of checking the cost following the McCloud/Sargeant judgement. of public sector schemes against a base cost, and Changes in the discount rate and longevity assumptions on which many of the Scheme-wide making changes if the current assessed cost of the actuarial factors, including early and late retirement factors, are based. scheme is higher or lower than this base cost. . Uncertainties over GMPs and benefit improvements CPI: Consumer Price Index (CPI) is the price inflation There are a number of uncertainties over the future benefit structure of the LGPS (NI), index that increases to pensions and deferred pensions including GMP equalisation and indexation after 5 April 2021, the cost management paid by the Fund are currently based on. It is published process, and the remedy that may be agreed in relation to the McCloud/Sargeant case. every month by the Office for National Statistics. Further explanation of these uncertainties is set out in Section c of the Further Information Section.

Membership data and benefits valued

Membership numbers are shown graphically below. Further details can be The value of liabilities is influenced by the average age of the members. found in Section b of the Further Information section. The chart below shows unweighted average ages.

The deferred membership numbers include members who had yet to Members' benefits are set out in the Regulations. Different benefits (and decide whether to take a refund of contributions. retirement ages) apply to membership before 1 April 2009, between 1 April 2009 and 31 March 2015, and after 31 March 2015. We have carried out some general checks to satisfy ourselves that the

information used for this valuation is broadly consistent compared with that used for the previous valuation and (where relevant) that shown in the Our valuation calculations make no allowance for: Fund's Annual Report and Accounts. . any discretionary benefits

However, the valuation results rely on the accuracy of the information . any future changes to State Pension Age supplied.

Funding objectives

The Committee's funding objective is to hold assets at least equal in value The discount rate to the funding target (past service liabilities). The Funding Strategy Statement describes the approach used to set the To calculate the past service liabilities and the cost to the employers of funding target and hence the discount rates. The Committee adopts different future benefit accrual, the benefits paid out by the Fund are estimated for discount rates depending on employers' circumstances including the each year into the future. The estimated benefit payments are then likelihood of exit and what would happen to the liabilities on exit. 'discounted back' to the valuation date using an agreed rate of interest known as the discount rate. Prudence in the valuation is achieved through the use of discount rates which have a materially better than evens chance of being The chart below shows the cashflow pattern for a typical LGPS fund (based achieved by the Fund’s assets. Information on the level of on past service benefits). Most cashflows are linked to future levels of prudence (or risk) in the funding strategy is contained in the salary growth and inflation. Fund’s Funding Strategy Statement and we have advised on this previously.

At the 2019 valuation there are 4 funding targets:

. the Main Employer group and subsumption bodies funding target, which assumes indefinite future investment in assets similar to the Fund's holdings at the valuation date (allowing for any known or planned changes to the long-term investment strategy as appropriate). . the intermediate funding target for employers who are deemed to be less likely to exit than the orphan admission bodies but which do not ExpectedExpected cashflows cashflows(£M)(£M) have a subsumption commitment and are deemed to be less secure than the Main Employer group employers

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 Years into the future

. the ongoing orphan funding target for admission bodies whose liabilities Investment strategy would be orphan on exit, where the discount rate has regard to the possibility that participation may cease and that the exit valuation would The Committee's investment strategy is set out in its Statement of assume a low risk investment portfolio made up of long dated Investment Principles. In summary the current strategy is to invest Government bonds (of appropriate nature and term) at cessation. approximately 56% of the Fund's assets in growth assets, such as equities, property and infrastructure, to generate investment returns. The Committee . the low risk funding target for "orphaned" liabilities that relate to also invests approximately 44% in absolute return bonds, index linked gilts employers which have already exited the fund. and multi asset credit to achieve diversification. A description of these funding targets and employer categories is set out in the Glossary. The assets as at the valuation date are described in Section d of the Further Information section of this report.

Summary of assumptions

The table below summarises the key assumptions agreed with the Committee at this and the previous valuation. The assumptions are used to calculate the past service liabilities, cost of future benefit accrual and contributions for the recovery plan. Further details of all of the assumptions are set out in Section e of the Further Information section of this report.

Assumptions Previous valuation This valuation

In-service discount rate Main Employer group and subsumption bodies 4.5% pa 4.1% pa funding target

Intermediate funding target 4.5% pa 4.1% pa

Ongoing orphan funding target 4.5% pa 4.1% pa

Low risk funding target 2.1% pa 1.3% pa

Average in-service discount rate 4.5% pa 4.1% pa Left-service discount rate Main Employer group and subsumption bodies 4.5% pa 4.1% pa funding target

Intermediate funding target 3.5% pa 3.1% pa

Ongoing orphan funding target 2.5% pa 1.6% pa

Low risk funding target 2.1% pa 1.3% pa

Average left-service discount rate 3.9% pa 3.4% pa

Rate of revaluation of pension accounts 2.0% pa 2.1% pa and pension increases (on pension in excess of GMPs)

Pensionable Pay Increases 3.5% pa 3.6% pa

Post-retirement mortality assumption – S2N tables with best-estimate scaling factors S2N tables with best-estimate scaling factors base table (for retirements in normal health) derived from experience analysis combined with derived from experience analysis combined postcode analysis with postcode analysis

Post-retirement mortality assumption – CMI 2014 core projections with long-term CMI 2018 projections with SK=7.5, A=0.0 and future improvements improvement rate of 1.5% p.a. for men and long-term improvement rate of 1.5% p.a. for women men and women

We show below the assumed life expectancies for current members resulting from these mortality assumptions

These have been updated to reflect recent research, a Fund membership postcode analysis and the Fund's pensioner mortality experience using Aon's Demographic HorizonsTM longevity model.

Assumed life expectancy at age 65 Member currently aged 65 Member currently aged 45

Previous This valuation Previous valuation This valuation valuation

Men 23.1 21.8 25.3 23.1 Women 25.7 24.9 28.0 26.3

In our view these assumptions are appropriate for the purposes of the valuation and setting Employer contributions to the Fund.

Valuation method As for the previous valuation, the past service liabilities have been calculated using the projected unit method. This method, with a one year control period, has also been used to calculate the cost of future benefits building up for most employers. The attained age method has been used for some employers who do not admit new employees to the Fund. The methods which apply to individual employers or groups of employers are set out in other advice papers.

Past service results

A comparison of the Fund's assets with the past service liabilities calculated The Fund has moved from a past service shortfall of £262.6M at 31 March using the assumptions described in the previous section is set out below. 2016 to a past service surplus of £836.9M at 31 March 2019.

The chart below shows the key reasons for the change in funding position, (£M) (the dark grey bars to the right of the chart are source of profit to the Fund and the light grey bars to the left are source of loss). Value of past service benefits for:

Active members 3,347.9

Deferred members 749.1

Pensioner members 3,106.0

Value of liabilities 7,203.0

Value of assets 8,039.9

Past service surplus/(shortfall) 836.9

Funding Level 112%

The above results exclude an allowance for past service McCloud costs of £72M.

Addressing the shortfall / allowing for the surplus

We have agreed with the Committee that for individual employers the surplus/shortfall will be removed by Shorthand reducing contributions payable/payment of additional contributions by the employers over a range of different recovery periods not exceeding 17 years for a shortfall and 20 years in the case of a surplus. Pensionable Pay: as defined in the Across the Fund as a whole, the past service contributions required to remove the surplus over a recovery Regulations in relation to post-2015 period of 20 years from 1 April 2020 are a reduction in employer contributions of 4.3% of Pensionable Pay membership assuming the membership remains broadly stable and pay increases and other assumptions are as assumed. Recovery period: the period over which In practice, different recovery periods apply to individual employers or groups of employers in the Fund. any surplus or shortfall is eliminated. Contributions payable by each employer or group are set out in the Rates and Adjustments Certificate and Past service contribution: the adjustment reflect each employer's recovery period and funding position. to the future service rate, expressed as a % Past service contributions allow for interest on the employer's surplus or shortfall between 31 March 2019 of pensionable pay or as a £ amount, and 1 April 2020 as well as the difference between contributions payable and the cost of benefit accrual needed to restore the funding level of the over 2019/20. Fund as a whole to 100% over the recovery For some employers, contribution increases/reductions will be phased in over a number of years (or 'steps') period, if the membership is broadly stable as permitted by the Funding Strategy Statement in order to deliver greater stability of contributions. and experience is as assumed.

Future service results

The table below shows the aggregate cost to employers at The future service contribution rate has increased from 19.3% of Pensionable Pay to 23.5% the valuation date of benefits members will earn in future of Pensionable Pay. (the aggregate future service contribution rate) based on the funding assumptions. Contributions at the aggregate The chart below shows the key reasons for the change in the future service contribution rate. future service rate would be appropriate if the Fund had no The light grey bars to the right are sources of increase in the future service rate and the dark surplus or shortfall. grey bars to the left are sources of reduction.

% % of pay Pensionable Pay 2016 Future service rate 19.3%

Value of benefits building up 26.4 Change in financial assumptions 2.8% (before McCloud/Cost Management)

Expected cost of death in service cash 0.1 Change in demographic assumptions -1.5% sum Change in expense allowance 0.1% Allowance for administration expenses 0.5 Change in average age and miscellaneous 0.0% Less member contributions (6.3)

Allowance for cost cap/McCloud 2.8% Allowance for Cost Cap / McCloud 2.8 (future service) 2019 Future service rate 23.5%

2019 cost to employers (future service 23.5 contribution rate)

In addition, there is an employer cost of 0.4% of pay for the (past service) allowance for the Cost Cap / McCloud. See Section c of the Further Information section for more information on how we have assessed the total employer cost of 3.2% of pay for Cost Cap / McCloud.

Risks and uncertainties

Key risks which could affect the Fund's future cashflows and funding . Other risks – issues relating to climate change and other environmental position, include: risks as well as long-term uncertainty around geopolitical, societal and . Funding risk –that the value placed on the past service liabilities is technological shifts may also impact on the funding, investments and set too low and contributions paid into the Fund prove insufficient Fund employers' covenant. to meet the payments as they fall due. The chart below shows the approximate impact of a number of one-off step . Employer risk –that an employer is no longer able to meet its changes on the Fund's funding position (all other elements of the valuation liabilities in the Fund, e.g. due to insolvency. basis being unchanged): . Investment risks –that investment returns are lower than allowed for in the valuation, and also that the assets are volatile and move out of line with the liabilities, so the funding position is not stable. . Longevity risk –that Fund members live for longer than expected and pensions are therefore paid for longer resulting in a higher cost for the Fund. . Inflation risk –that inflation is higher than expected, resulting in higher pension increases (and payments to pensioners revaluation of pension accounts) than allowed for in the valuation. . Options for members (or other parties) – the risk that members exercise options resulting in unanticipated extra costs. For example, members could exchange less of their pension for a cash lump sum than allowed for in the valuation. . Legislative/Regulatory risk –that changes to general and LGPS (NI) specific regulations, taxation, national changes to pension These are not intended to be "worst case scenarios" and could occur in requirements, or employment law result in an increased cost of administration, investment or funding for benefits. We have made combination rather than in isolation. Conversely, in practice, some of these explicit allowance for known uncertainties as set out in Section c of changes may be partially offset by other changes, e.g, a reduction in the the Further Information. expected investment return or inflation might lead to a compensating change . COVID-19 related risks – the current outbreak of the novel in asset values, or a change in asset values might lead to a compensating Coronavirus COVID-19 may impact adversely on the investments, change in expected investment returns. on the ability of the Fund to realise future investment returns and on the Fund employers’ covenant. (We have commented further The Funding Strategy Statement sets out the key actions taken by the on the impact of recent adverse market movements within the Committee to mitigate the above risks. “Final comments” section of this report.)

Individual employer contribution rates

Contributions are set for employers, or groups of employers that take into account a Projections number of factors including: We estimate that, by the next valuation, these . Regulation 68 – which requires the Fund Actuary to have regard to contributions will have reduced the funding level to about 110%, assuming the experience of the Fund - The existing and prospective liabilities between the two valuation dates is in line with the - The desirability of maintaining as nearly a constant a common rate of employers’ assumptions and the assumptions underlying the contribution as possible funding targets remain unchanged. - The Committee's Funding Strategy Statement, and - The requirement to secure the solvency of the Fund and the long-term cost efficiency of the LGPS (NI), so far as relating to the Fund. . The results of the valuation.

. Any individual adjustments to the common rate by reason of any circumstances peculiar to the employer.

. Discussions between the Fund Actuary, the Committee and employers, including the Committee's view of the affordability of contributions, where relevant.

. The employer's (or group's) membership profile and funding level and, where relevant, assumptions and recovery periods specific to the employer's circumstances.

For certain employers which are in surplus, it has been agreed with the Committee that the employer may use part of the surplus to support the payment of contributions to the Fund at a rate below the future service contribution rate.

The aggregate employer contributions certified for the 3 years from 1 April 2020 are as follows

Year from 1 April % of pensionable pay Plus total contribution amount (£M)

2020 19.7 2.540

2021 19.7 2.604

2022 19.7 2.671

. The % of Pensionable Pay contributions shown in the above table are an average (weighted by Pensionable Pay) of the amounts certified for individual employers in each year. . The annual contribution amounts are the aggregate of the additional contribution amounts certified for individual employers in each year. . Payments to meet additional costs arising from early retirements and other increases in benefits are payable in addition. . At the end of the period shown above, the annual contribution amounts for each employer or group are anticipated to increase by approximately 3.6% pa until the end of the relevant recovery period. Thereafter, aggregate contributions are anticipated to be in line with the future service contribution rate of that employer, subject to review at future actuarial valuations.

Final comments

Developments since the valuation date The key results from this . Market movements valuation are: We believe that over the period between the valuation date and the date of signature of this report, the The Fund's assets were £8,039.9M Fund’s assets have not kept pace with the discount rate underpinning the liabilities (4.1%), on account and the past service liabilities of the fall in asset values within the last month due to the emerging COVID-19 crisis. It is not yet clear to £7,203.0M, corresponding to a what extent the liabilities may have fallen through changes to discount rates (net of assumed inflation) surplus of £836.9M and a funding but our view is that overall the funding level is likely to have reduced for employers subject to the Main level of 112%. Employer group, subsumption and intermediate funding targets. The future service contribution rate for the Fund as a whole is 23.5% of Whilst gilt yields have experienced considerable volatility in recent weeks, it is likely that the reduction in Pensionable Pay including the future funding level will have been more significant for employers subject to a funding target where the service element of the McCloud/cost discount rate is linked to gilt yields (i.e. the ongoing orphan funding target and the low risk (orphan) exit management allowance. funding target). If the surplus is removed over 20 years from 1 April 2020, the Overall, we believe that market movements in the period since the valuation date will have led to a aggregate total employer reduction in the funding level of the Fund as a whole and the impact on employers’ future service contributions needed would be contribution rate will vary between employers depending on, among other things, which funding target equivalent to 19.6%* of Pensionable Pay until 31 March 2040, reverting to the employer is subject to. 23.9% (including the total

McCloud/cost management The above means that if we were carrying out the valuation based on current conditions rather than as allowance) of Pensionable Pay at 31 March 2019 (and assuming an unchanged level of risk in the funding strategy) it is likely that we thereafter. would be recommending higher employer contributions. However bearing in mind the overall level of * if the membership remains broadly prudence in the funding strategy, the long-term nature of the Fund and the fact that a high percentage stable and pay increases in line with of the liabilities are backed by public sector government-funded employers, we have agreed with the our assumptions. Committee that certifying contributions based on market conditions at the valuation date, as has been

the practice at previous valuations, remains appropriate. However, as employer contributions, particularly for those in the Main Employer Group, have been reduced below the assessed cost of future service benefits in light of the surplus calculated as at 31 March 2019, we have further agreed

with the Committee that contributions from 1 April 2021 and/or 1 April 2022 will be reviewed. If market conditions are deemed to warrant it, those contributions may be increased above the rate shown in the Rates and Adjustments Certificate in order to avoid a higher increase being needed from 1 April 2023. In addition, as market conditions continue to evolve, consideration will be given to revisiting contributions for short-term employers under Regulation 70(8) in advance of the next valuation. . Employers joining or exiting since the valuation date Contributions for employers joining since 31 March 2019 will be advised separately. A revised Rates and Adjustments Certificate will have been prepared as necessary for employers exiting the Fund since 31 March 2019 where this has been requested by the Committee. Where a revised Rates and Adjustments Certificate has not yet been produced for such employers, the employer has been included in the Rates and Adjustments Certificate amended to this report but with zero contributions in anticipation of the revised certificates being issued. Monitoring the Fund

In the light of the volatility inherent in situations where investments do not match liabilities, the Committee monitors the financial position on a regular basis. It will also consider monitoring the position of individual employers, particularly those subject to the ongoing orphan funding target and those which may exit the Fund before 1 April 2023. Where appropriate and permitted by the Regulations, contributions for those employers may be amended before the next valuation due as at 31 March 2022.

Further Information

a. Legal framework

It is a legal requirement to carry out a full valuation as at 31 March 2019

This report was commissioned by and is produced solely for the use of the Committee. It is produced in compliance with: . Regulation 68 of the Local Government Pension Scheme Regulations (Northern Ireland) 2014. . The terms of the agreement between the Committee and Aon Hewitt Limited, on the understanding that it is solely for the benefit of the addressee. . Technical Actuarial Standard 100: Principles for Technical Actuarial Work ('TAS 100') and Technical Actuarial Standard 300: Pensions ('TAS 300'). Unless prior written consent has been given by Aon Hewitt Limited, this report should not be disclosed to or discussed with anyone else unless they have a statutory right to see it. We permit the Committee to release copies of this report to the following parties only: . Any employer which contributes to the Fund, and their guarantors. . The Department for Communities (Northern Ireland). . The Northern Ireland Audit Office. We also permit the Committee to pass our report to the Government Actuary's Department (GAD) in connection with their statutory duties. None of the above bodies has our permission to pass our report on to any other parties. Notwithstanding such consent, Aon Hewitt Limited does not assume responsibility to anyone other than the addressee of this report. At the request of the Committee, we have consented to their releasing a copy of this report to certain specified parties and/or via certain communication routes. We consent on the basis that there is no duty of care established toward, and

Aon Hewitt Limited disclaims any responsibility or liability arising from, any person having access to the report either directly from the Committee, indirectly from a third party or through any other means.

No recipients of the report other than the Committee are permitted to reproduce, distribute or communicate any part of this report to any other party. Any third party using this report does so entirely at its own risk and no third party is entitled to rely on this report for any purpose whatsoever.

No decisions should be taken on the basis of this report by any party other than our client, the Committee, and nothing in this report removes the need for readers to take proper advice in relation to their specific circumstances.

b. Membership data

The results in this report are based on membership data which is summarised below.

Active members Number Average age Total pensionable Total pre 2015 Total pre 2015 Total post 2015 salaries pension accrued lump pension (2015 scheme (£000 pa) sum (£000) (£000 pa) definition) (£000 pa)

2016 Male 17,735 47.3 408,172 75,130 133,100 8,229

Female 35,082 45.7 442,496 76,007 127,243 8,823

Total 52,817 46.2 850,668 151,137 260,343 17,052

2019 Male 19,155 47.1 451,159 62,344 105,193 32,451

Female 42,324 45.7 531,360 65,475 106,137 36,292

Total 61,479 46.1 982,519 127,819 211,330 68,743

Notes: The average ages shown in these tables are unweighted

Pensionable Pay is over the year to the valuation date, and includes annualised pay for new entrants during the year. Actual part-time pay is included for part-timers

Post 2015 pension figures include the April 2019 revaluation

Deferred members Number Average age Total pension Average Total pre 2015 accrued (£000 pa) pension (£ pa) lump sum (£000) 2016 Male 9,592 46.9 15,883 1,656 38,380

Female 20,635 45.5 20,276 983 46,689

Total 30,227 46.0 36,159 1,196 85,069

2019 Male 9,758 46.3 17,338 1,787 32,726

Female 22,495 45.7 24,327 1,088 44,152

Total 32,253 45.9 41,665 1,300 76,878

Notes: Averages ages are unweighted. The deferred pension amounts shown above are at the valuation date and include the April 2019 revaluation.

Included in the above, there were 3,871 (4,787 in 2016) members who are yet to decide whether to take a refund of contributions. Pensioner members Number Average age Total pension Average pension (£000 pa) (£ pa) 2016 Male 13,420 70.6 90,785 6,765

Female 13,051 69.4 52,687 4,037

Dependants 5,345 71.7 12,500 2,339

Total 31,816 70.3 155,972 4,902

2019 Male 14,982 70.6 103,718 6,923

Female 16,339 69.2 66,931 4,096

Dependants 5,779 70.3 15,433 2,671

Total 37,100 70.2 186,082 5,016

Notes: The pension amounts shown above include the increase awarded in April of the appropriate year. Average ages are unweighted. The dependants data includes 421 (379 in 2016) members in receipt of a child's pension. 25

Employer Employer Number of Total Number of Number of Code(s) active members pensionable deferred pensioners pay(1) members(2) and (£M) dependants

342 Abbey Christian Brothers Grammar 26 0.401 14 14 School 332 Acorn Integrated Primary School 33 0.205 1 2

156 Agricultural Research Institute 0 0.000 33 87 Northern Ireland 365 Alpha Housing Association 0 0.000 7 14

370 Amey Community Limited 5 0.108 0 3

1 Antrim and Newtownabbey Borough 766 17.610 424 513 Council 239 Apex Housing 168 4.362 181 69

359 Apleona (HSG) Limited 3 0.072 0 2

268 Aquinas Diocesan Grammar School 48 0.837 22 9

344 Arc21 10 0.441 5 1

2 Ards and North Down Borough 817 18.859 501 640 Council 282 Ards Citizens' Advice Bureau 0 0.000 6 3

317 Ark Housing Association Northern 25 0.579 28 4 Ireland Limited

Employer Employer Number of Total Number of Number of Code(s) active members pensionable deferred pensioners pay(1) members(2) and (£M) dependants

341 Armagh & Down Tourism Partnership 0 0.000 3 1

89 Armagh County Welfare Committee 0 0.000 1 0

347 Armagh Integrated College 0 0.000 2 1

62 Armagh Planetarium & Observatory 24 0.941 39 24

3 Armagh, Banbridge and Craigavon 1,725 31.381 643 657 District Council 118 Arts Council of Northern Ireland 41 1.326 69 51

338 Assumption Grammar School 22 0.410 11 7

148 Ballymena Academy 39 0.532 14 33

132 Bangor Grammar School 47 0.683 17 36

149 Belfast Charitable Society 2 0.073 54 98

7 Belfast City Council 2,302 62.608 1,175 2,245

138 Belfast High School 39 0.538 22 33

292 Belfast Metropolitan College 409 10.270 277 230

Employer Employer Number of Total Number of Number of Code(s) active members pensionable deferred pensioners pay(1) members(2) and (£M) dependants

137 Belfast Royal Academy 82 1.012 36 44

323 Belfast Visitor & Convention Bureau 50 1.242 38 3

395 Belfast Waterfront and Ulster Hall 181 2.162 113 3 Limited 367 Blackwater Integrated College 28 0.300 31 8

279 Braidside Integrated Primary & 29 0.176 4 4 Nursery School 266 Bridge Integrated Primary School 39 0.265 8 4

136 Campbell College 91 1.627 38 46

371 Capita Managed IT Solutions Limited 9 0.270 7 0

5 Causeway Coast and Glens District 662 17.509 289 553 Council 288 Cedar Integrated Primary School 22 0.159 7 1

229 Choice Housing Ireland Limited 116 3.155 224 140

147 Christian Brothers Grammar School 34 0.629 22 13

280 Citizens Advice Bureau 0 0.000 44 7

Employer Employer Number of Total Number of Number of Code(s) active members pensionable deferred pensioners pay(1) members(2) and (£M) dependants

366 City of Derry Airport 33 1.086 15 7

179 Citybus Limited 885 25.480 347 783

257 Clothing & Industrial Training 0 0.000 2 6 Services Limited 214 Coleraine Grammar School 33 0.507 21 33

110 Coleraine Harbour Commissioners 3 0.081 3 5

328 Comhairle na Gaelscolaiochta 8 0.288 19 6

251 Community Relations Council 16 0.534 59 19

319 Connswater Homes Limited 28 1.039 10 4

252 Construction Industry Training Board 27 0.746 41 47 (CITB) 394 Controlled Schools Support Council 15 0.444 2 3

362 Corran Integrated Primary School 30 0.158 14 4

222 Council for Catholic Maintained 54 1.832 49 53 Schools 170 Council for the Curriculum, 267 7.731 184 114 Examinations and Assessment (CCEA)

Employer Employer Number of Total Number of Number of Code(s) active members pensionable deferred pensioners pay(1) members(2) and (£M) dependants

240 Covenanter Residential Association 1 0.016 1 1 Limited 369 Cranmore Integrated Primary School 13 0.170 10 0

192 Dalriada School 35 0.415 16 35

19 Derry City and Strabane District 910 23.574 340 537 Council 277 Derry Visitor and Convention Bureau 13 0.327 4 2

208 Dominican College, Belfast 39 0.559 19 29

335 Dominican College, Portstewart 14 0.230 10 4

83 Down County Health & Welfare 0 0.000 3 0

283 Down District Citizens Advice Bureau 0 0.000 6 0

349 Drumlins Integrated Primary School 27 0.152 11 0

284 Drumragh Integrated College 32 0.540 8 3

245 Dungannon and District Housing 0 0.000 3 0 Association 27 Education Authority 32,992 320.607 16,617 14,314

Employer Employer Number of Total Number of Number of Code(s) active members pensionable deferred pensioners pay(1) members(2) and (£M) dependants

254 Engineering Training Council for 0 0.000 9 6 Northern Ireland 267 Enniskillen Integrated Primary School 5 0.088 0 2

396 Enniskillen Royal Grammar School 52 0.669 4 3

181 Enterprise Ulster 0 0.000 187 482

276 Erne Integrated College 2 0.041 2 5

15 Fermanagh and Omagh District 876 18.715 380 426 Council 84 Fermanagh County Health & Welfare 0 0.000 0 1

216 Foyle and Londonderry College 60 0.841 17 25

134 Friends School 57 0.689 30 27

337 General Teaching Council for 18 0.527 9 4 Northern Ireland 131 Glenmona Resource Centre 0 0.000 129 120

364 Graham Asset Management 4 0.087 0 4

388 Greenwich Leisure Limited 297 4.538 89 36

Employer Employer Number of Total Number of Number of Code(s) active members pensionable deferred pensioners pay(1) members(2) and (£M) dependants

234 Grove Housing Association Limited 2 0.046 3 3

238 Habinteg Housing Association 77 1.690 41 20 (Ulster) Limited 260 Hazelwood College 60 0.979 33 12

261 Hazelwood Integrated Primary 66 0.428 19 13 School Limited 230 Hearth Housing Association Limited 0 0.000 1 3

167 Hunterhouse College 27 0.378 23 22

348 Ilex Urban Regeneration Company 0 0.000 19 4 Limited 278 Integrated College Dungannon 87 0.728 27 3

129 Jordanstown Schools 3 0.065 11 25

262 Lagan College 78 1.091 34 10

226 Laganside Corporation 0 0.000 17 11

154 Larne Grammar School 36 0.448 11 16

361 Libraries NI 664 11.386 89 369

Employer Employer Number of Total Number of Number of Code(s) active members pensionable deferred pensioners pay(1) members(2) and (£M) dependants

123 Linen Hall Library 21 0.498 22 18

9 Lisburn and Castlereagh City Council 875 19.418 613 529

163 Livestock & Meat Commission for 15 0.362 61 44 Northern Ireland 219 Local Government Staff Commission 2 0.071 7 6

904 Londonderry Development 0 0.000 0 4 Committee 213 Loreto College 22 0.383 7 7

215 Loreto Grammar School 33 0.453 18 15

99 Lough Bradan (C.Tyr) W'works JB 0 0.000 2 2

330 Loughview Integrated Primary School 29 0.244 16 0

287 Lumen Christi College 33 0.483 29 4

345 Maine Integrated Primary School 15 0.098 9 2

316 Malone College 28 0.528 23 7

322 Methodist College 74 1.282 69 32

Employer Employer Number of Total Number of Number of Code(s) active members pensionable deferred pensioners pay(1) members(2) and (£M) dependants

4 Mid and East Antrim District Council 752 18.815 341 557

11 Mid Ulster District Council 908 18.502 363 367

358 Middletown Centre for Autism Limited 36 1.048 10 1

263 Mill Strand Integrated Primary School 19 0.218 5 5

321 Millennium Forum 14 0.385 10 4

333 Millennium Integrated Primary School 27 0.218 18 1

250 Mount Lourdes Grammar School 47 0.606 9 13

290 Mourne Heritage Trust 6 0.167 10 3

320 New-Bridge Integrated College 26 0.474 10 5

236 Newington Housing Association 11 0.298 7 3 (1975) Limited 13 Newry, Mourne and Down District 1,007 23.598 408 550 Council 235 North Belfast Housing Association 29 0.763 24 3 Limited 324 North Coast Integrated College 24 0.341 8 8

Employer Employer Number of Total Number of Number of Code(s) active members pensionable deferred pensioners pay(1) members(2) and (£M) dependants

306 North West Regional College 279 5.798 125 70

372 Northern Community Leisure Trust 28 0.536 19 4

391 Northern Community Leisure Trust 2 2 0.043 0 4

165 Northern Ireland Agricultural Trust 0 0.000 0 4

198 Northern Ireland Consumer Council 0 0.000 1 0

242 Northern Ireland Co-Ownership 57 1.943 17 24 Housing Association Limited 158 Northern Ireland Council For 0 0.000 0 3 Educational Research 275 Northern Ireland Council for 8 0.293 25 9 Integrated Education 190 Northern Ireland Development 0 0.000 0 9 Agency 203 Northern Ireland Federation of 8 0.245 13 14 Housing Associations 114 Northern Ireland Fire & Rescue 240 6.621 122 210 Service 180 Northern Ireland Fishery Harbour 20 0.432 5 32 Authority 313 Northern Ireland Hospice 79 2.081 65 40

Employer Employer Number of Total Number of Number of Code(s) active members pensionable deferred pensioners pay(1) members(2) and (£M) dependants

115 Northern Ireland Housing Executive 2,762 71.103 742 4,054

223 Northern Ireland Legal Services 0 0.000 193 50 Commission 150 Northern Ireland Local Government 9 0.307 28 4 Association (NILGA) 119 Northern Ireland Local Government 78 2.019 65 22 Officers' Superannuation Committee (NILGOSC) 256 Northern Ireland Open Learning 0 0.000 1 1 Centre 206 Northern Ireland Railway Company 987 35.904 320 597 Limited 265 Northern Ireland Rural Development 0 0.000 39 15 Council 373 Northern Ireland Screen 25 0.871 12 3

116 Northern Ireland Tourist Board 119 4.004 112 75

153 Northern Ireland Training Executive 0 0.000 6 86

197 Northern Ireland Transport Holding 28 1.866 47 45 Company 293 Northern Regional College 211 4.792 217 177

273 Oakgrove Integrated College 43 0.705 19 12

Employer Employer Number of Total Number of Number of Code(s) active members pensionable deferred pensioners pay(1) members(2) and (£M) dependants

318 Oakgrove Integrated Primary School 9 0.127 5 5

334 Oakwood Integrated Primary School 34 0.244 26 2

343 Omagh Integrated Primary School 2 0.018 5 0

173 Our Lady & St Patrick's College 31 0.512 23 28

289 Our Lady's Grammar School 27 0.447 10 12

325 Outdoor Recreation (NI) 17 0.456 26 0

387 Phoenix Integrated Primary School 19 0.154 2 0

125 Pigs Marketing Board for Northern 0 0.000 6 48 Ireland 350 Portadown Integrated Primary School 72 0.331 19 3

211 Probation Board for Northern Ireland 345 9.878 195 280 (PBNI) 194 Radius Housing Association Ltd 300 6.934 470 271

281 Rainey Endowed School 11 0.205 5 6

172 Rathmore Grammar School 39 0.731 24 22

Employer Employer Number of Total Number of Number of Code(s) active members pensionable deferred pensioners pay(1) members(2) and (£M) dependants

253 Road Transport Industrial Training 0 0.000 2 12 Board 351 Roe Valley Integrated Primary 19 0.128 1 0 School 368 Rowandale Integrated Primary 31 0.282 7 0 School 128 Royal Belfast Academical Institution 60 0.839 41 26

117 Royal College of Nursing for 0 0.000 0 18 Northern Ireland 157 Royal School, Armagh 72 0.752 20 17

218 Royal School, Dungannon 32 0.542 8 17

271 Rural Housing Association 17 0.441 4 1

221 Sacred Heart Grammar School 31 0.437 14 21

336 Saints and Scholars Integrated 23 0.151 11 6 Primary School 122 Seapark House Management 0 0.000 2 19 Committee 140 Seed Potato Marketing Board, 0 0.000 0 6 Northern Ireland 274 Shimna Integrated College 45 0.575 19 15

Employer Employer Number of Total Number of Number of Code(s) active members pensionable deferred pensioners pay(1) members(2) and (£M) dependants

314 Slemish Integrated College 73 0.735 27 5

298 South Eastern Regional College 412 7.855 234 156

232 South Ulster Housing Association 10 0.276 6 3 Limited 305 South West College 283 5.637 175 79

304 Southern Regional College 458 6.911 199 122

339 Sperrin Integrated College 38 0.457 14 3

326 Spires Integrated Primary School 17 0.105 11 2

187 Sports Council for Northern Ireland 99 2.937 130 58

363 St Colman's College 18 0.373 15 4

142 St Columb's College 38 0.810 9 32

188 St Dominic's High School 30 0.506 11 17

309 St Joseph's Grammar School 24 0.370 11 10

202 St Joseph's Training School 0 0.000 12 28 (Adolescent Centre) Middletown

Employer Employer Number of Total Number of Number of Code(s) active members pensionable deferred pensioners pay(1) members(2) and (£M) dependants

285 St Louis Grammar School 30 0.506 6 9

139 St Malachy's College 47 0.830 37 29

145 St Mary's Christian Brothers 37 0.652 22 11 Grammar School 220 St Mary's Grammar School 85 0.937 32 18

175 St Mary's University College 75 2.039 55 72

241 St Matthew's Housing Association 5 0.151 0 3 Limited 209 St Michael's College 37 0.513 33 16

196 St Patrick's Academy 46 0.615 26 21

160 St Patricks Grammar School 22 0.395 17 9

393 St Patrick's Grammar School, 23 0.218 5 0 Armagh 392 St Ronan's College 83 1.038 5 5

329 Strangford College 40 0.558 15 8

176 Stranmillis University College 133 2.797 87 105

Employer Employer Number of Total Number of Number of Code(s) active members pensionable deferred pensioners pay(1) members(2) and (£M) dependants

212 Strathearn School 41 0.678 23 25

146 Sullivan Upper School 63 0.880 36 37

161 Thornhill College 29 0.633 7 33

87 Tyrone County Health Committee 0 0.000 0 1

327 Ulidia Integrated College 58 0.729 29 9

204 Ulster American Folk Park 0 0.000 3 13

189 Ulsterbus Limited 2,222 62.595 959 2,064

126 United Dairy Farmers 0 0.000 195 751

164 University of Ulster 639 13.153 786 1,162

205 Victoria College 64 1.083 40 23

174 Victoria Voluntary Homes For Girls 0 0.000 1 0

152 Wallace High School 54 0.705 42 25

331 Windmill Integrated Primary School 29 0.194 12 1

Employer Employer Number of Total Number of Number of Code(s) active members pensionable deferred pensioners pay(1) members(2) and (£M) dependants

237 Woodvale and Shankill Co 5 0.123 4 4

340 Youth Justice Agency For NI 0 0.000 264 267

224 Youthnet 0 0.000 13 7

Totals: 61,479 983 32,253 37,100

Notes:

1) Pensionable Pay is over the year to the valuation date and includes annualised pay for new entrants during the year. Actual part- time pay is included for part-timers. The breakdown above includes Councillors. 2) Deferred members include the number of members who are yet to decide whether to take a refund of contributions.

Section c below sets out the approach to dealing with current legislative uncertainties relating to members' benefits in this valuation.

c. Uncertainties

Allowance for McCloud, Cost Management and GMP equalisation/indexation

Background on McCloud/Sargeant Following a review of public service pension schemes by the Independent Public Services Pensions Commission led by Lord Hutton (the Hutton Report) UK public service pension schemes were reformed with effect from 1 April 2015 (1 April 2014 for the LGPS in England and Wales), with the objective of reducing the overall cost to the taxpayer and putting schemes on a more sustainable footing. Reforms common to all the main public service pension schemes included later retirement ages (State Pension Age in most cases); benefits based on career average earnings (so no longer being linked to 'final pay' at retirement), and tiered member contribution rates. The reforms also included transitional protections for members within 10 years of their Normal Pension Age on 1 April 2012. Generally, this was implemented by allowing those members to retain membership of the 'pre-reformed' schemes, whilst all other members were moved into the new arrangements (for a number of the schemes this was subject to a “tapering” approach for members who were close to the 10-year cut-off). In relation to the LGPS (NI), all members joined the new 2015 Scheme for membership after 1 April 2015, but members within 10 years of normal retirement were given an underpin (or 'better of both') promise, so their benefits earned after 1 April 2015 would be at least as valuable in terms of amount and when they could be drawn, as if they had remained in the 2009 Scheme. In December 2018 the Government lost a Court of Appeal case (the 'McCloud/Sargeant' judgement) which ruled that the transitional protection arrangements, put in place when the judges' and firefighters' pension schemes were reformed, amounted to illegal age discrimination. The Government was subsequently denied leave to appeal the Court of Appeal’s decision on 27 June 2019. While the judgement was not in relation to the LGPS NI, the Government announced in a Written Ministerial Statement on 15 July 2019 "… as ‘transitional protection’ was offered to members of all the main public service pension schemes, the government believes that the difference in treatment will need to be remedied across all those schemes". The remedy is likely to differ by scheme depending on the transitional protections adopted.

In line with guidance issued by the Scheme Advisory Board (SAB) of the LGPS in England and Wales, we have discussed and agreed with the Committee the allowance which should be made in this valuation for possible additional liabilities arising from the McCloud case. It should be noted that since we provided our advice to the Committee on the allowance to be made in this valuation, case management discussions have commenced for both the judges’ and firefighters’ schemes, as well as police via a similar case – the Aarons case which had previously stayed behind the McCloud/Sargeant judgement. However, as at the date of this report, we do not have confirmed details of any benefit changes for the LGPS NI. Cost management and McCloud/Sargeant The design of the new public service schemes also included a cost control mechanism which was intended to protect employers from rising pension costs due to demographic and other factors. This mechanism includes both a floor and a cap on employer contributions and requires that if the cost, assessed by GAD in line with assumptions set by HM Treasury, is more than 2% of pay above the cap or below the floor, member contributions and/or benefits must be amended to bring the cost for employers back to level of the cap. The cost management process considered changes in the cost of the LGPS NI between those assessed based when the new benefit designs were implemented and 31 March 2016, and as the floor was breached it was expected that improvements to benefits or member contributions would be implemented with effect from 1 April 2019, and taken into account in this valuation when setting employer contributions from 1 April 2020. However, following the Court of Appeal judgement in the McCloud case, the cost management process was paused in January 2019. It is not yet clear what the effect on the liabilities will be, but we believe the outcome will be one or other of the following: . The McCloud changes mean the cost management floor has no longer been breached (in which case the additional liabilities are simply those due under the McCloud remedy) . After allowing for the McCloud changes the cost management floor has still been breached (in which case the additional liabilities will be a combination of those due under McCloud and those that would be agreed under the re- started cost management process)

The McCloud changes, and their effect on the cost management process, and hence on the benefits and cost of the LGPS, are currently uncertain. However, any change is likely to increase the benefits payable from the scheme, and therefore the cost of the scheme. We set out below the allowance made for potential increases in benefits at this valuation as set out in previous advice papers. It should be noted that since our calculations were carried out, in December 2019 the Fire Brigades’ Union announced that it was considering mounting a legal challenge to the Government’s decision to pause the cost management process and to press for any cost management changes to be in addition to any remedy for McCloud/Sargeant. Whilst this presents the possibility of additional costs falling on employers, given the uncertainty over whether such action will be taken and whether it will be successful we have not revisited the allowance made in this valuation for McCloud and cost management. Allowance for McCloud/Cost Management Our advice, given in October 2019, showed the results of our calculation of the proposed allowance for McCloud. This calculation was based on the Main Employer Group funding assumptions and the following additional assumptions: . the final salary underpin is extended to all members who were active members as at 1 April 2015 . as for the existing underpin, the underpin applies only to members' benefits on retirement (i.e. not on withdrawal from service before retirement, and not to the benefits of spouses or dependants) . the underpin continues to apply for service until at least 31 March 2023 (ie till the end of the period covered by the Rates and Adjustments Certificate) for affected members The past service cost has been converted to a % of pay calculated across the Fund as a whole using the 20 year recovery period. It should be noted that the calculated cost is particularly sensitive to the real salary increase assumption (and to a lesser extent the withdrawal assumption) which was previously advised on for funding purposes and not for the purpose of estimating the possible cost of the McCloud judgement. In addition, we recommended that the minimum allowance made for McCloud and cost management should be an increase of 3.2% of pay in the employer contribution rate (the average increase to employer costs that had been expected to apply under the cost management process if no McCloud remedy had been required).

We allowed for the same adjustment to individual employer contributions as calculated for the Fund as a whole, expressed as a % of pay. The adjustment has been set to be as a minimum of the 3.2% of pay expected from the cost management process. Since our advice was given and the calculations carried out, the case management discussions which have taken place have led to the suggestion that for the LGPS NI the changes may mean: . the application of the new underpin is restricted to fewer members than we have allowed for, i.e. only those who joined pre 2012 but of any age . the application of the new underpin is time limited and may not apply to all membership until the end of the Rates and Adjustment Certificate in 31 March 2023 (although the exact time period is subject to considerable uncertainty) . the underpin is extended to benefits on withdrawal and to dependants, including possibly transfers out, which goes beyond what has been allowed for in the valuation . there is a need to ensure the revised underpin is checked for all retirements since 2015 to avoid ”reverse discrimination”, again going beyond what has been allowed for in the valuation As this information became available after the majority of contributions had been advised to employers, and there is still no certainty in relation to any benefit changes for the LGPS NI, we have not sought to review the allowance made. In general, if the underpin applies to pre 2012 joiners rather than pre 2015 joiners then this would reduce the cost, but extending the underpin to benefits on withdrawal, spouses and transfers would increase the cost, and it is not clear what the net effect would be. We will advise the Committee of the expected effect of any changes once there is greater clarity on the precise details of those changes, and on whether contributions for employers should be revisited before the next formal valuation as at 31 March 2022, assuming this can be done within the regulatory provisions. GMP indexation and equalisation Guaranteed Minimum Pension (GMP) is a portion of pension that was accrued by individuals who were contracted out of the State Second Pension between 6 April 1978 and 5 April 1997. The rate at which GMP was accrued, and the date it is payable, is different for men and women, meaning there is an inequality for male and female members who have GMP. This was a consequence of the State Pension itself being unequal at the time. Prior to 6 April 2016 the LGPS was not required to pay any pension increases on GMPs accrued before April 1988 and was only required to pay limited increases on GMPs accrued after 1988 (CPI inflation capped at 3% p.a.). In return, the Additional Pension (AP) element of the State Pension included top-up payments to pensioners to give inflation

protection on the GMP element where this was not provided by the LGPS. However, reforms were made to the State Pension system in April 2016 which scrapped AP and therefore removed the facility for central government to fully index the combined pension through AP. In March 2016 the government introduced an ‘interim solution’ for public service schemes to pay full inflationary increases on GMPs for those reaching State Pension Age (SPA) between 6 April 2016 and 5 April 2021 to ensure members continued to receive full inflationary increases on their combined public service scheme and State pensions. This was allowed for in the 2016 valuation of the Fund. In January 2018 the interim solution was extended to individuals reaching SPA on or before 5 April 2021. Further, the Government has indicated that it is committed to continuing to compensate all members of public service pension schemes reaching SPA after 5 April 2021. The Government's view is that this solution (including its ongoing commitment to compensate members reaching SPA after 5 April 2021) will meet equalisation requirements. On 26 October 2018 the High Court ruled in the Lloyds Bank case that equalisation for the effect of unequal GMPs is required. The ruling confirmed that trustees have a duty “to equalise benefits for men and women so as to alter the result which is at present produced in relation to GMPs". Allowance for GMP indexation As agreed with the Committee we have allowed for an extension of the interim arrangements such that full CPI on all GMP is assumed to be payable from the Fund for members reaching State Pension Age after 5 April 2021. We believe that the cost would be very similar if the solution were to be conversion of GMP to scheme benefits on a 1:1 basis.

d. Assets

The audited accounts for the Fund for the year ended 31 March 2019 show the assets were £8,039.9M. The chart shows how the assets are broadly invested at the valuation date.

The discount rate has been set using the long term target asset split for the Fund as set out in the Statement of Investment Principles and not the current split of the Fund assets.

e. Assumptions used to value the liabilities and assess contribution rates

Financial assumptions In-service discount rate Main Employer group / subsumption funding target 4.1% pa Intermediate funding target 4.1% pa Ongoing orphan funding target 4.1% pa Low risk funding target 1.3% pa Left-service discount rate Main Employer group/ subsumption funding target 4.1% pa Intermediate funding target 3.1% pa Ongoing orphan funding target 1.6% pa Low risk funding target 1.3% pa Rate of Pensionable Pay increases (service up to 31 March 2015 only) 3.6% pa (in addition to promotional increases) Rate of CPI inflation 2.1% pa Rate of revaluation of pension accounts 2.1% pa Rate of pension increases (all pensions) 2.1% pa Administration expenses 0.5% of Pensionable Pay

Demographic assumptions

Pre-retirement base mortality Males: 25% of Standard SAPS S2NMA tables Females: 25% of Standard SAPS S2NFA tables

Post-retirement base mortality Current normal health pensioners who retired in normal health: Males: 105% of Standard SAPS S2NMA tables Females: 90% of Standard SAPS S2NFA tables Dependants of current pensioners: Males: 110% of Standard SAPS S2NMA tables Females: 115% of Standard SAPS S2NFA tables Current dependants: Males: 105% of Standard SAPS S2NMA tables Females: 115% of Standard SAPS S2NFA tables Current non-pensioners retiring in normal health: Males: 110% of Standard SAPS S2NMA tables Females: 95% of Standard SAPS S2NFA tables Dependants of current non-pensioners: Males: 115% of Standard SAPS S2NMA tables Females: 125% of Standard SAPS S2NFA tables Pensioners retiring in ill-health: Males: 105% of Standard SAPS S2IMA tables Females: 105% of Standard SAPS S2IFA tables Improvements to mortality An allowance for improvements between 2007 and 2019 and for future

improvements in line with the CMI 2018 Mortality Projections Model with sk of 7.5 and parameter A of 0.0 assuming a long-term annual rate of improvement in mortality rates of 1.5% pa for men and women.

Promotional salary increases Allowance has been made for age-related promotional increases based on analysis of actual experience of the fund (see sample rates below).

Withdrawals Allowance has been made for withdrawals from service based on analysis of actual experience of the fund (see sample rates below). On withdrawal, members are assumed to retain a deferred pension in the Fund.

Retirement age Members were assumed to retire at the following ages:

Member group Assumed age at retirement

Active members with protected Rule of Age 63 85 age (joined LGPS NI before 1 October 2006 and attained age 60 before 1 April 2020) (Group 1 and 2 members)

Members who joined before 1 October Age 63 2006 and have a rule of 85 age of 60 (Group 3 members)

Members who joined before 1 October Age 65 2006 and have a rule of 85 age of greater than 60 and members who joined before 1 April 2015 but after 1 October 2006 (Group 4 members)

Members who joined after 31 March State Pension Age (or age 65 if 2015 (Group 4 members) higher)

Any part of a member’s pension payable from a later age than the assumed retirement age will be reduced.

Retirement cash sum Each member is assumed to surrender pension on retirement, such that the total cash received is 75% of the permitted maximum.

Family details Each man is assumed to be three years older than his wife/partner. 80% of non-pensioners are assumed to be married or have a spouse, civil partner or co-habitee ('partner') at retirement or earlier death. 80% of pensioners are assumed to be married or have a partner at age 65. No allowance for child's pensions.

Retirement due to ill-health Allowance has been made for retirements due to ill-health based on actual experience of the fund (see below). Proportions assumed to fall into the different benefit tiers are: Tier 1 80% Tier 2 20% Take up of 50:50 scheme All members are assumed to remain in the scheme they are in at the date of the valuation.

Discretionary benefits No allowance

Sample rates

The table below illustrates the proposed allowance for withdrawals from service, ill-health retirement and promotional pay increases at sample ages.

Current Percentage Percentage leaving the Fund Percentage leaving the Fund each age promotional pay each year as a result of year as a result of ill-health increase over year withdrawal from service retirement

Male & Female Male & Female Male & Female

20 3.6% 9.4% 0.00%

25 3.2% 6.2% 0.02%

30 2.0% 4.4% 0.03%

35 1.6% 3.5% 0.05%

40 0.4% 2.8% 0.07%

45 0.0% 2.3% 0.11%

50 0.0% 1.8% 0.26%

55 0.0% 1.5% 0.70%

60 0.0% 0.9% 1.39%

65 0.0% 0.0% 1.39%

f. Membership experience

As required by the Regulations, the demographic assumptions used in valuing the liabilities of the Fund are set out in Further Information section e, above. The demographic assumptions have been informed by an analysis of membership experience including experience since the last valuation of the Fund up to the effective date of our analysis, as well as recent research and other relevant factors, such as a membership postcode analysis for death after retirement assumptions. For death after retirement the experience analysis was undertaken for the period 1 April 2009 to 31 March 2018. For withdrawal rates and ill health retirement rates our analysis was undertaken for the period 1 April 2014 to 31 March 2018. The table below shows a comparison of expected membership movements measured by pension amount based on the assumptions adopted for the 2019 valuation with observed membership movements for death after retirement (in normal and ill health), withdrawal rates and rates of ill health retirement. The figures are based on our full experience analysis pro- rated for a 3 year period for ease of comparison.

Type of exit Men (£000 of pension) Women (£000 of pension) Death after retirement in normal health Actual 4,656 3,051 Expected 4,448 2,814 Death after retirement in ill health Actual 2,133 751 Expected 2,019 759 Withdrawals (including refunds) Actual 3,530 4,678 Expected 5,488 6,334 Ill-health retirements Actual 970 807 Expected 1,366 1,177

g. Dashboard

Following the review by the Government Actuary's Department of all LGPS valuations as at 31 March 2016 under section 13 of the Public Service Pensions Act 2013 for funds in England and Wales, with a separate exercise for the LGPS NI under the Public Service Pensions Act (Northern Ireland) 2014, a standard "dashboard" has been added to the valuation reports for funds in England and Wales to aid comparison between the valuations for those funds. We have included this Dashboard as agreed with the Committee although we note that GAD's Section 13 review of the LGPS NI is quite separate from that in England and Wales and therefore there is no statutory requirement (nor power) to compare the Fund's valuation to that of LGPS funds in England and Wales. Past service funding position – local funding basis Funding level (assets/liabilities) 112% Funding level (change since last valuation) 16% Asset value used at the valuation £8,039.9M Value of liabilities £7,203.0M Surplus (deficit) £836.9M Discount rate(s) 1.30% - 4.10% Assumed pension increases (CPI) 2.10% Method of derivation of discount rate, plus any changes since previous valuation The Funding Strategy Statement describes the approach used to set the funding target and hence the discount rates. The Committee adopts different discount rates depending on employers' circumstances including the likelihood of exit and what would happen to the liabilities on exit. Assumed life expectancies at age 65: . Average life expectancy for current pensioners - men currently age 65 21.8 years . Average life expectancy for current pensioners - women currently age 65 24.9 years . Average life expectancy for future pensioners - men currently age 45 23.1 years . Average life expectancy for future pensioners - women currently age 45 26.3 years

Past service funding position – England & Wales Scheme Advisory Board basis (for comparison purposes only) Market value of assets £8,039.9M Value of liabilities £6,501.5M Funding level on England & Wales SAB basis (assets/liabilities) 124% Funding level on England & Wales SAB basis (change since last valuation) 15%

Contribution rates payable Future service contribution rate 20.7% Past service contribution rate (cash amounts in each year in line with CIPFA guidance): . Past service contribution rate 2020/21 (£8.148M) . Past service contribution rate 2021/22 (£8.469M) . Past service contribution rate 2022/23 (£8.799M) Giving total expected contributions: . Total expected contributions 2020/21 (£ figure based on assumed payroll of £1,036.2m) £206.871M . Total expected contributions 2021/22 (£ figure based on assumed payroll of £1,073.5m) £214.291M . Total expected contributions 2022/23 (£ figure based on assumed payroll of £1,112.2m) £221.979M Average employee contribution rate (% of pay) 6.3% Employee contribution rate (£ figure based on assumed payroll of £1,036.2m) £64.9M

Additional information Percentage of liabilities relating to employers with deficit recovery periods of longer than 20 years 0% Percentage of total liabilities that are in respect of current employers that are not included in the Main Employer Group 4%

h. Rates and Adjustments Certificate

Actuarial certificate given for the purposes of Regulation 68 of the Local Government Pension Scheme Regulations (Northern Ireland) 2014. In accordance with Regulation 68 of the Local Government Pension Scheme Regulations (Northern Ireland) 2014 (‘the 2014 Regulations'), we certify that contributions should be paid by employers at the following rates for the period 1 April 2020 to 31 March 2023. . Future service contribution rates for individual employers. The common rate for the whole Fund, calculated as a weighted average of the employers’ individual rates, is 20.7% p.a. of Pensionable Pay based on the benefits in force on the valuation date. . An allowance for the impact of the McCloud judgement and the cost management, of 3.2% of pay, has been included in the % of pay rates set out below. . Individual adjustments (i.e. past service contribution rates) which, when added to or subtracted from the Future service rate, produce the following minimum employer contribution rates.

Employer Employer Contributions in year Contributions in year Contributions in year Code(s) commencing 1 April commencing 1 April commencing 1 April 2020 2021 2022 % Additional % Additional % Additional pensionable contribution pensionable contribution pensionable contribution pay (£s) pay (£s) pay (£s)

342 Abbey Christian Brothers Grammar School 19.5% 0 19.5% 0 19.5% 0

332 Acorn Integrated Primary School 19.5% 0 19.5% 0 19.5% 0

370 Amey Community Limited 37.5% 0 37.5% 0 37.5% 0

375 Antrim and Newtownabbey Borough 19.5% 0 19.5% 0 19.5% 0 Council

239 Apex Housing 39.7% 401,000 39.7% 415,000 39.7% 430,000

359 Apleona (HSG) Limited 0.0% 0 0.0% 0 0.0% 0

268 Aquinas Diocesan Grammar School 19.5% 0 19.5% 0 19.5% 0

344 Arc21 19.5% 0 19.5% 0 19.5% 0

385 Ards and North Down Borough Council 19.5% 0 19.5% 0 19.5% 0

317 Ark Housing Association Northern Ireland 19.5% 0 19.5% 0 19.5% 0 Limited 62 Armagh Planetarium & Observatory 19.5% 0 19.5% 0 19.5% 0

376 Armagh, Banbridge and Craigavon 19.5% 0 19.5% 0 19.5% 0 District Council 118 Arts Council of Northern Ireland 19.5% 0 19.5% 0 19.5% 0

338 Assumption Grammar School 19.5% 0 19.5% 0 19.5% 0

148 Ballymena Academy 19.5% 0 19.5% 0 19.5% 0

132 Bangor Grammar School 19.5% 0 19.5% 0 19.5% 0

149 Belfast Charitable Society 36.5% 20,000 36.5% 21,000 36.5% 22,000

377 Belfast City Council 19.5% 0 19.5% 0 19.5% 0

138 Belfast High School 19.5% 0 19.5% 0 19.5% 0

353 Belfast Metropolitan College 19.5% 0 19.5% 0 19.5% 0

137 Belfast Royal Academy 19.5% 0 19.5% 0 19.5% 0

323 Belfast Visitor & Convention Bureau 20.5% 0 20.5% 0 20.5% 0

395 Belfast Waterfront and Ulster Hall Limited 18.1% 0 18.1% 0 18.1% 0

367 Blackwater Integrated College 19.5% 0 19.5% 0 19.5% 0

279 Braidside Integrated Primary & Nursery 19.5% 0 19.5% 0 19.5% 0 School 266 Bridge Integrated Primary School 19.5% 0 19.5% 0 19.5% 0

136 Campbell College 19.5% 0 19.5% 0 19.5% 0

371 Capita Managed IT Solutions Limited 38.8% 9,600 38.8% 9,900 38.8% 10,300

378 Causeway Coast and Glens District 19.5% 0 19.5% 0 19.5% 0 Council 288 Cedar Integrated Primary School 19.5% 0 19.5% 0 19.5% 0

386 Choice Housing Ireland Limited 39.1% 406,000 39.1% 420,000 39.1% 435,000

147 Christian Brothers Grammar School 19.5% 0 19.5% 0 19.5% 0

366 City of Derry Airport 11.4% 0 11.4% 0 11.4% 0

179 Citybus Limited 19.5% 0 19.5% 0 19.5% 0

390 Coleraine Grammar School 19.5% 0 19.5% 0 19.5% 0

110 Coleraine Harbour Commissioners 26.9% 0 26.9% 0 26.9% 0

328 Comhairle na Gaelscolaiochta 19.5% 0 19.5% 0 19.5% 0

251 Community Relations Council 19.5% 0 19.5% 0 19.5% 0

319 Connswater Homes Limited 19.5% 0 19.5% 0 19.5% 0

252 Construction Industry Training Board 19.5% 0 19.5% 0 19.5% 0 (CITB) 394 Controlled Schools Support Council 19.5% 0 19.5% 0 19.5% 0

362 Corran Integrated Primary School 19.5% 0 19.5% 0 19.5% 0

222 Council for Catholic Maintained Schools 19.5% 0 19.5% 0 19.5% 0

170 Council for the Curriculum, Examinations 19.5% 0 19.5% 0 19.5% 0 and Assessment (CCEA)

369 Cranmore Integrated Primary School 19.5% 0 19.5% 0 19.5% 0

192 Dalriada School 19.5% 0 19.5% 0 19.5% 0

379 Derry City and Strabane District Council 19.5% 0 19.5% 0 19.5% 0

277 Derry Visitor and Convention Bureau 19.5% 0 19.5% 0 19.5% 0

208 Dominican College, Belfast 19.5% 0 19.5% 0 19.5% 0

335 Dominican College, Portstewart 19.5% 0 19.5% 0 19.5% 0

349 Drumlins Integrated Primary School 19.5% 0 19.5% 0 19.5% 0

284 Drumragh Integrated College 19.5% 0 19.5% 0 19.5% 0

389 Education Authority 19.5% 0 19.5% 0 19.5% 0

267 Enniskillen Integrated Primary School 19.5% 0 19.5% 0 19.5% 0

396 Enniskillen Royal Grammar School 19.5% 0 19.5% 0 19.5% 0

276 Erne Integrated College 19.5% 0 19.5% 0 19.5% 0

380 Fermanagh and Omagh District Council 19.5% 0 19.5% 0 19.5% 0

216 Foyle and Londonderry College 19.5% 0 19.5% 0 19.5% 0

134 Friends School 19.5% 0 19.5% 0 19.5% 0

337 General Teaching Council for Northern 19.5% 0 19.5% 0 19.5% 0 Ireland 364 Graham Asset Management 0.0% 0 0.0% 0 0.0% 0

388 Greenwich Leisure Limited 15.8% 0 15.8% 0 15.8% 0

234 Grove Housing Association Limited 19.5% 0 19.5% 0 19.5% 0

238 Habinteg Housing Association (Ulster) 19.5% 0 19.5% 0 19.5% 0 Limited 260 Hazelwood College 19.5% 0 19.5% 0 19.5% 0

261 Hazelwood Integrated Primary School 19.5% 0 19.5% 0 19.5% 0 Limited 167 Hunterhouse College 19.5% 0 19.5% 0 19.5% 0

278 Integrated College Dungannon 19.5% 0 19.5% 0 19.5% 0

129 Jordanstown Schools 19.5% 0 19.5% 0 19.5% 0

262 Lagan College 19.5% 0 19.5% 0 19.5% 0

154 Larne Grammar School 19.5% 0 19.5% 0 19.5% 0

361 Libraries NI 19.5% 0 19.5% 0 19.5% 0

123 Linen Hall Library 20.3% 0 20.3% 0 20.3% 0

381 Lisburn and Castlereagh City Council 19.5% 0 19.5% 0 19.5% 0

163 Livestock & Meat Commission for 19.5% 0 19.5% 0 19.5% 0 Northern Ireland 219 Local Government Staff Commission 37.6% 0 37.6% 0 37.6% 0

213 Loreto College 19.5% 0 19.5% 0 19.5% 0

215 Loreto Grammar School 19.5% 0 19.5% 0 19.5% 0

330 Loughview Integrated Primary School 19.5% 0 19.5% 0 19.5% 0

287 Lumen Christi College 19.5% 0 19.5% 0 19.5% 0

345 Maine Integrated Primary School 19.5% 0 19.5% 0 19.5% 0

316 Malone College 19.5% 0 19.5% 0 19.5% 0

322 Methodist College 19.5% 0 19.5% 0 19.5% 0

382 Mid and East Antrim District Council 19.5% 0 19.5% 0 19.5% 0

383 Mid Ulster District Council 19.5% 0 19.5% 0 19.5% 0

358 Middletown Centre for Autism Limited 19.5% 0 19.5% 0 19.5% 0

263 Mill Strand Integrated Primary School 19.5% 0 19.5% 0 19.5% 0

321 Millennium Forum 19.5% 0 19.5% 0 19.5% 0

333 Millennium Integrated Primary School 19.5% 0 19.5% 0 19.5% 0

250 Mount Lourdes Grammar School 19.5% 0 19.5% 0 19.5% 0

290 Mourne Heritage Trust 39.1% 600 39.1% 700 39.1% 700

320 New-Bridge Integrated College 19.5% 0 19.5% 0 19.5% 0

236 Newington Housing Association (1975) 19.5% 0 19.5% 0 19.5% 0 Limited 384 Newry, Mourne and Down District 19.5% 0 19.5% 0 19.5% 0 Council

374 North Belfast Housing Association 19.5% 0 19.5% 0 19.5% 0 Limited 324 North Coast Integrated College 19.5% 0 19.5% 0 19.5% 0

356 North West Regional College 19.5% 0 19.5% 0 19.5% 0

372 Northern Community Leisure Trust 0.0% 0 0.0% 0 0.0% 0

391 Northern Community Leisure Trust 2 9.5% 0 9.5% 0 9.5% 0

242 Northern Ireland Co-Ownership Housing 19.5% 0 19.5% 0 19.5% 0 Association Limited 275 Northern Ireland Council for Integrated 19.5% 0 19.5% 0 19.5% 0 Education 203 Northern Ireland Federation of Housing 19.5% 0 19.5% 0 19.5% 0 Associations 114 Northern Ireland Fire & Rescue Service 19.5% 0 19.5% 0 19.5% 0

180 Northern Ireland Fishery Harbour 19.5% 0 19.5% 0 19.5% 0 Authority 313 Northern Ireland Hospice 26.1% 0 26.1% 0 26.1% 0

115 Northern Ireland Housing Executive 19.5% 0 19.5% 0 19.5% 0

150 Northern Ireland Local Government 19.5% 0 19.5% 0 19.5% 0 Association (NILGA)

119 Northern Ireland Local Government 19.5% 0 19.5% 0 19.5% 0 Officers' Superannuation Committee (NILGOSC) 206 Northern Ireland Railway Company 19.5% 0 19.5% 0 19.5% 0 Limited 373 Northern Ireland Screen 19.5% 0 19.5% 0 19.5% 0

116 Northern Ireland Tourist Board 19.5% 0 19.5% 0 19.5% 0

197 Northern Ireland Transport Holding 19.5% 0 19.5% 0 19.5% 0 Company 355 Northern Regional College 19.5% 0 19.5% 0 19.5% 0

273 Oakgrove Integrated College 19.5% 0 19.5% 0 19.5% 0

318 Oakgrove Integrated Primary School 19.5% 0 19.5% 0 19.5% 0

334 Oakwood Integrated Primary School 19.5% 0 19.5% 0 19.5% 0

398 OCS (Belfast Metropolitan College) 37.3% 0 37.3% 0 37.3% 0

343 Omagh Integrated Primary School 19.5% 0 19.5% 0 19.5% 0

173 Our Lady & St Patrick's College 19.5% 0 19.5% 0 19.5% 0

289 Our Lady's Grammar School 19.5% 0 19.5% 0 19.5% 0

325 Outdoor Recreation (NI) 21.6% 0 21.6% 0 21.6% 0

387 Phoenix Integrated Primary School 19.5% 0 19.5% 0 19.5% 0

350 Portadown Integrated Primary School 19.5% 0 19.5% 0 19.5% 0

211 Probation Board for Northern Ireland 19.5% 0 19.5% 0 19.5% 0 (PBNI) 194 Radius Housing Association Ltd 30.2% 1,603,000 30.2% 1,635,000 30.2% 1,669,000

281 Rainey Endowed School 19.5% 0 19.5% 0 19.5% 0

172 Rathmore Grammar School 19.5% 0 19.5% 0 19.5% 0

351 Roe Valley Integrated Primary School 19.5% 0 19.5% 0 19.5% 0

368 Rowandale Integrated Primary School 19.5% 0 19.5% 0 19.5% 0

128 Royal Belfast Academical Institution 19.5% 0 19.5% 0 19.5% 0

157 Royal School, Armagh 19.5% 0 19.5% 0 19.5% 0

218 Royal School, Dungannon 19.5% 0 19.5% 0 19.5% 0

271 Rural Housing Association 19.5% 0 19.5% 0 19.5% 0

221 Sacred Heart Grammar School 19.5% 0 19.5% 0 19.5% 0

336 Saints and Scholars Integrated Primary 19.5% 0 19.5% 0 19.5% 0 School 274 Shimna Integrated College 19.5% 0 19.5% 0 19.5% 0

314 Slemish Integrated College 19.5% 0 19.5% 0 19.5% 0

352 South Eastern Regional College 19.5% 0 19.5% 0 19.5% 0

232 South Ulster Housing Association Limited 27.5% 87,900 27.5% 89,800 27.5% 91,800

354 South West College 19.5% 0 19.5% 0 19.5% 0

357 Southern Regional College 19.5% 0 19.5% 0 19.5% 0

339 Sperrin Integrated College 19.5% 0 19.5% 0 19.5% 0

326 Spires Integrated Primary School 19.5% 0 19.5% 0 19.5% 0

187 Sports Council for Northern Ireland 19.5% 0 19.5% 0 19.5% 0

363 St Colman's College 19.5% 0 19.5% 0 19.5% 0

142 St Columb's College 19.5% 0 19.5% 0 19.5% 0

188 St Dominic's High School 19.5% 0 19.5% 0 19.5% 0

309 St Joseph's Grammar School 19.5% 0 19.5% 0 19.5% 0

285 St Louis Grammar School 19.5% 0 19.5% 0 19.5% 0

397 St Louis Grammar School (Kilkeel) 19.5% 0 19.5% 0 19.5% 0

139 St Malachy's College 19.5% 0 19.5% 0 19.5% 0 145 St Mary's Christian Brothers Grammar 19.5% 0 19.5% 0 19.5% 0 School 220 St Mary's Grammar School 19.5% 0 19.5% 0 19.5% 0

175 St Mary's University College 19.5% 0 19.5% 0 19.5% 0

241 St Matthew's Housing Association 19.5% 0 19.5% 0 19.5% 0 Limited 209 St Michael's College 19.5% 0 19.5% 0 19.5% 0

196 St Patrick's Academy 19.5% 0 19.5% 0 19.5% 0

160 St Patricks Grammar School 19.5% 0 19.5% 0 19.5% 0

393 St Patrick's Grammar School, Armagh 19.5% 0 19.5% 0 19.5% 0

392 St Ronan's College 19.5% 0 19.5% 0 19.5% 0

329 Strangford College 19.5% 0 19.5% 0 19.5% 0

176 Stranmillis University College 19.5% 0 19.5% 0 19.5% 0

212 Strathearn School 19.5% 0 19.5% 0 19.5% 0

146 Sullivan Upper School 19.5% 0 19.5% 0 19.5% 0

161 Thornhill College 19.5% 0 19.5% 0 19.5% 0

327 Ulidia Integrated College 19.5% 0 19.5% 0 19.5% 0

189 Ulsterbus Limited 19.5% 0 19.5% 0 19.5% 0

164 University of Ulster 19.5% 0 19.5% 0 19.5% 0

195 Victoria College 19.5% 0 19.5% 0 19.5% 0

152 Wallace High School 19.5% 0 19.5% 0 19.5% 0

331 Windmill Integrated Primary School 19.5% 0 19.5% 0 19.5% 0

237 Woodvale and Shankill Co 27.6% 11,700 27.6% 12,100 27.6% 12,600

Total 19.7% 2,539,800 19.7% 2,603,500 19.7% 2,671,400

Notes 1. Contributions for 2021/2022 and 2022/23 have been based on the valuation results as at 31 March 2019 which for the Main Employer Group was a funding level of 113%. The effect of measures being taken to limit the Covid-19 pandemic on economic activity and asset values subsequent to the valuation date may mean the Fund is no longer in surplus by the time of the next valuation due as at 31 March 2022. As a result, the employer contributions for 2021/22 and 2022/23 set out above are subject to confirmation and may be increased in order to avoid a higher increase being required from 1 April 2023 if the funding level falls materially below its 31 March 2019 level.

2. Regulation 68(9) requires a statement to be made of the assumptions on which the certificate is given as regards the number of members, and the associated amount of liabilities arising, who will become entitled to payment of pensions under the LGPS (NI) regulations during the period covered by the certificate. These assumptions can be found in section e of the Further Information section of the formal report on the valuation as at 31 March 2019. They include assumptions relating to the members who are expected to become entitled to payment of pensions via normal retirement and ill health retirement. In practice members will also become entitled to payment of pensions via early retirement for reasons of redundancy or efficiency reasons as well as on voluntary early retirement, for which no assumption has been made.

3. The contributions shown above represent the minimum contributions to be paid by each employer. Employers may choose to pay additional contributions from time to time subject to the Committee's agreement.

4. Additional contributions may be required in respect of any additional liabilities that arise under the provisions of Regulations 31, 32, 36 and 37 of the 2014 Regulations and employers will be notified of such contributions separately by the Committee.

5. Additional contributions may be payable by any employers which have ceased to participate in the Fund since 31 March 2019 and these will be certified separately.

6. Contribution rates for Employers commencing participation in the Fund after 31 March 2019 will be advised separately.

Alison Murray FFA Scott Campbell FIA [email protected] [email protected]

30 March 2020

i. Glossary

Active member A person who is employed by an employer participating in the Fund, and is paying (or is treated as paying) contributions to the Fund (includes certain members temporarily absent, eg due to family leave or sickness).

Admission body An employer admitted to the Fund under an admission agreement or with a "deemed" admission agreement.

Attained age method This is one of the methods used by actuaries to calculate a contribution rate to the Fund. This method calculates the present value of the benefits expected to accrue to members over their expected remaining membership of the Fund expressed as a percentage of their expected future pensionable pay. It allows for projected future increases to pay or revaluation as appropriate through to retirement or date of leaving service. The method is based on the current membership and takes no account of the possibility of further members joining the Fund. If there are no new members, this method would be expected to result in a stable contribution rate, once surpluses or shortfalls are taken into account, and if all the other assumptions are borne out. However, if more members join the Fund to replace older leavers, the contribution rate can be expected to fall.

Consumer prices index (CPI) This is the price inflation index that increases to pensions and deferred pensions paid by the Fund are currently based on. It is published every month by the Office of National Statistics.

Deferred member A former employee who has left active membership, but has not yet received any benefits from the Fund and is prospectively entitled to receive a deferred pension from his/her normal pension age.

Discount rate Expected future investment returns calculated with reference to an assumed investment strategy and level of prudence. The discount rate is used to translate the estimated future benefit payments from the Fund into a single figure which represents the amount needed to be held today to provide them.

Fund actuary The actuary to the Fund, who provides actuarial advice to the Committee including carrying out the actuarial valuation contained in this report.

Funding level (or funding ratio) This is the ratio of the value of assets to the Funding Target.

Funding objective To hold sufficient and appropriate assets to cover the Funding Target.

Funding Strategy Statement A document prepared by the Committee in accordance with the Regulations which sets out the funding strategy adopted for the Fund. The Fund Actuary must have regard to this statement in preparing this actuarial valuation.

Funding target An assessment of the present value of the benefits that will be paid from the Fund in the future, normally based on pensionable service prior to the valuation date. Under the current Funding Strategy Statement the funding target is equal to the past service liabilities calculated using a prudent set of assumptions.

Future service contribution rate The contribution rate (expressed as a percentage of Pensionable Pay) required to meet the cost of benefits which will accrue to members in future.

Guaranteed minimum pensions (GMPs) Most Funds that were contracted out of the State Earnings Related Pension Scheme (SERPS) before April 1997 have to provide a pension for service before that date at least equal to the Guaranteed Minimum Pension (GMP). This is approximately equal to the SERPS pension that the member would have earned had the Fund not been contracted out. GMPs ceased to accrue on 6 April 1997 when the legislation changed.

Intermediate funding target For employers not deemed by the Committee to meet the criteria for membership of the Main Employer Group, but which the Committee considers to be sufficiently financially secure, the Committee may assume continued investment in a broad range of assets of higher risk than government bonds for a longer period than it would for orphan bodies. The funding target will still consider any likely change in notional or actual investment strategy as regards the assets held in respect of the body's liabilities when the employer exits. This is known as the intermediate funding target and is intended to be an interim step towards moving to the Ongoing Orphan funding target. The in-service discount rate has been set to be equal to the discount rate for the Main Employer group. Typically for such employers the left service discount rate will be equivalent to the yield on long-dated fixed interest gilts at a duration appropriate for the Fund's liabilities plus an asset out-performance assumption. Currently this is set so that the discount rate is equal to that used for employers on the Main Employer Group funding target, less 1%.

Long-term cost efficiency This is not defined in the Regulations but further explanation can be found in the Cipfa guidance 'Preparing and Maintaining a Funding Strategy Statement', dated September 2016: The notes to the Public Service Pensions Act (Northern Ireland) 2014 state: "Long-term cost-efficiency implies that the rate must not be set at a level that gives rise to additional costs. For example, deferring costs to the future would be likely to result in those costs being greater overall than if they were provided for at the time." The rate of employer contributions shall be deemed to have been set at an appropriate level to ensure long-term cost efficiency if the rate of

employer contributions is sufficient to make provision for the cost of current benefit accrual, with an appropriate adjustment to that rate for any surplus or shortfall in the fund. In assessing whether the above condition is met, the Government Actuary's Department (GAD) may have regard to the following considerations: . the implied average shortfall recovery period . the investment return required to achieve full funding over different periods, e.g. the recovery period . if there is no shortfall, the extent to which contributions payable are likely to lead to a shortfall arising in the future . the extent to which the required investment return above is less than the Committee’s view of the expected future return being targeted by the Fund’s investment strategy, taking into account changes in maturity/strategy as appropriate

Low risk funding target Funding target used for already orphaned liabilities in the Fund. The discount rate is based on the yield on long-dated fixed interest gilts at a duration appropriate for the Fund's liabilities.

Main Employer group Secure employers whose participation in the Fund is considered by the Committee to be indefinite.

Main Employer group/subsumption For secure employers whose participation in the Fund is considered by funding target the Committee to be indefinite and Admission Bodies with a subsumption commitment from such Scheduled Bodies, the Committee assumes indefinite investment in a broad range of assets of higher risk than risk free assets. This is known as the Main Employer group/subsumption body funding target.

(Ongoing) Orphan employer This is an employer whose participation in the Fund may cease at some future point in time, after which it is expected that the Committee will have no access to future contributions from that employer for the employer's liabilities in the Fund once any liability on exit has been paid. On exit the employer’s liabilities will become ‘orphan liabilities’ in the Fund.

Ongoing orphan funding target For active employers whose liabilities are expected to be orphaned on exit and do not qualify for the Main Employer Group or Intermediate Funding Target, the Committee will have regard to the potential for participation to cease (or for the body to have no contributing members), the potential timing of such exit, and any likely change in notional or actual investment strategy as regards the assets held in respect of the body's liabilities at the date of exit (i.e. whether the liabilities will become 'orphaned' or a guarantor exists to subsume the notional assets and liabilities). This is known as the ongoing orphan funding target. Typically employers which will ultimately give rise to Orphan liabilities will have a discount rate which is based on the yield on long-dated fixed interest gilts at a duration appropriate for the Fund's liabilities plus an asset out-performance assumption (this addition will be different when applied to liabilities in relation to members still in service and to those who have left service). Currently the in-service discount rate has been set to be equal to that of the Main Employer group. The addition for the left service discount rate reflects market expectations of the possible future increase in the gilt yield curve over the next five years.

Orphan/orphaned liabilities Liabilities in the fund for which no specified contributing employer(s) has responsibility, which therefore fall to be met by all employers in the Fund.

Past service liabilities This is the present value of the benefits to which members are entitled based on benefits accrued to the valuation date, assessed using the assumptions agreed for each employer between the Committee and the Fund Actuary. It generally allows for projected future increases to pay or revaluation as appropriate through to retirement or date of leaving service.

Pensioner member An individual who is receiving a pension from the fund, including dependants of former active, deferred or pensioner members.

Present value Actuarial valuations involve projections of pay, pensions and other benefits into the future. To express the value of the projected benefits in terms of a cash amount at the valuation date, the projected amounts are discounted back to the valuation date by a discount rate. This value is known as the present value. For example, if the discount rate was 4% a year and if we had to pay a cash sum of £1,040 in one year’s time the present value would be £1,000.

Projected unit method One of the common methods used by actuaries to calculate a contribution rate to a Fund. This method calculates the present value of the benefits expected to accrue to members over a control period (often one year) following the valuation date. The present value is usually expressed as a percentage of the members’ pensionable pay. It allows for projected future increases to pay or revaluation as appropriate through to retirement or date of leaving service. Provided that the distribution of members remains stable with new members joining to take the place of older leavers, the contribution rate calculated can be expected to remain stable, if all the other assumptions are borne out. If there are no new members however, the average age will increase and the contribution rate can be expected to rise.

Prudent Prudent assumptions are such that the actual outcome is considered to be more likely to overstate than understate the amount of money actually required to meet the cost of the benefits.

Rates and adjustments certificate A certificate required at each actuarial valuation by the Regulations, setting out the contributions payable by employers for the 3 years from the 1 April following the valuation date.

Recovery period The period over which any surplus or shortfall is to be eliminated.

Recovery plan Where a valuation shows a funding shortfall against the past service liabilities, a recovery plan sets out how the Committee intends to meet the funding objective.

Regulations The statutory regulations setting out the contributions payable to, and the benefits payable from, the Local Government Pension Scheme NI and how the fund is to be administered. They currently include the following sets of regulations: . Regulations - Local Government Pension Scheme Regulations (Northern Ireland) 2014 (as amended) . 2014 Transitional Regulations - Local Government Pension Scheme (Amendment and Transitional Provisions) Regulations (Northern Ireland) 2014 (as amended)

Shortfall Where the assets are less than the Funding Target, the shortfall is the Funding Target less the value of assets.

Shortfall contributions Additional contributions payable by employers to remove the shortfall by the end of the recovery period.

Solvency The notes to the Public Service Pensions Act (Northern Ireland) 2014 state that solvency means that the rate of employer contributions should be set at “such level as to ensure that the scheme’s liabilities can be met as they arise”. It is not regarded that this means that the pension fund 79

should be 100% funded at all times. Rather, and for the purposes of Section 13 of the Public Service Pensions Act (Northern Ireland) 2014, the rate of employer contributions shall be deemed to have been set at an appropriate level to ensure solvency if: . the rate of employer contributions is set to target a funding level for the whole fund (assets divided by liabilities) of 100% over an appropriate time period and using appropriate actuarial assumptions; and either . employers collectively have the financial capacity to increase employer contributions, and/or the fund is able to realise contingent assets should future circumstances require, in order to continue to target a funding level of 100%; or . there is an appropriate plan in place should there be, or if there is expected in future to be, no or a limited number of fund employers, or a material reduction in the capacity of fund employers to increase contributions as might be needed. If the conditions above are met, then it is expected that the fund will be able to pay scheme benefits as they fall due.

State pension age (SPA) Age at which State pensions are payable. Current legislation specifies the following ages: . Currently age 65. . Current legislation transitions State Pension Age for both men and women to age 68 by 2046, as follows: - to age 66 by 2020 - to age 67 by 2028 - to age 68 by 2046

Strains These represent the cost of additional benefits granted to members under a discretion of the employer or the Committee. They include the cost of providing enhanced benefits on retirement or redundancy.

Subsumption body An employer which is not a secure long term employer in the Main Employer group and where the Committee has obtained an undertaking from a related employer that, if and when the employer exits the Fund, they will be a source of future funding should any funding shortfalls emerge on the original employer's liabilities after exit. In this document the process of taking on the responsibility for future funding at the point of exit is known as ‘subsumption’ of an employer’s liabilities. The employer whose liabilities will be (or are being) subsumed is referred to as a subsumption body.

Surplus Where the assets are more than the Funding Target, the surplus is the value of assets less the Funding Target.

Transfer value Members generally have a legal right to transfer their benefits to another pension arrangement before they retire. In taking a transfer, members give up their benefits in a fund, and a sum of money (called the transfer value) is paid into another approved pension scheme. This is used to provide pension benefits on the terms offered in that scheme.

Alison Murray FFA Scott Campbell FIA

Partner Senior Consultant

[email protected] [email protected]

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